Additional disclosure - BTFG Advice Research

Regulatory reporting of BT Financial Group Advice Research.

e BT Financial Group Advice Research team (BT Advice Research) is part of the BT Financial Group (BTFG), the wealth management arm of Westpac Banking Corporation (ABN 33 007 457 141, AFSL 233714) (Westpac). BT Advice Research provides research and information via Westpac. The following relates to research and information provided by BT Advice Research under the Westpac Australian Financial Services Licence (AFSL) only.

BT Advice Research, via Westpac’s AFSL, provides research and information on managed funds, structured investments and other products for the use of advisers who provide financial product advice through BT Advice aligned financial planning channels. The relevant BT Advice aligned financial planning channels that utilise BT Advice Research are:

  • Securitor Financial Group Ltd;
  • BT Select, operating under Magnitude Group Pty Ltd;
  • Westpac Financial Planning;
  • Bank of Melbourne Financial Planning;
  • St.George Financial Planning; 
  • BankSA Financial Planning;
  • Scaled Advice; and
  • Advisers who subscribe to the BT Advice Research service through Licensee Select.

Where deemed appropriate by the relevant financial planner, research and information may also be provided to a client of that financial planner. Research and information published by BT Advice Research is not otherwise available to the public.

Any financial product advice BT Advice Research provides will be general in nature and will have been prepared without taking into account the reader’s objectives, financial situation and needs. Readers of BT Advice Research should seek personal advice from a financial adviser that is appropriate to their objectives, financial situation and needs. Readers should obtain and consider the disclosure document (e.g. product disclosure statement or prospectus) (if any) for a product before deciding whether to acquire, continue to hold or dispose of that product. BT Advice Research has no knowledge of the reader’s personal circumstances and will provide the reader with factual information or general advice only.

The following material is published by BT Advice Research to provide information on processes and procedures relating to BT Advice Research services, research methodologies and conflict of interest management to allow users of the research to assess the quality and reliability of the investment research provided.

This guide includes:

  • Scope of BTFG Advice Research and Expertise
  • Purpose of Research and Reports
  • Research Coverage
  • Currency and Historical Research
  • Research Methodology
  • Spread of APLstatus
  • Testing our Research
  • Managing Conflicts of Interest

Scope of BT Advice Research and expertise

BT Advice Research provides research and information via Westpac, under the Westpac AFSL only. In this document, this Westpac issued research and information is referred to as BT Advice Research.

BT Advice Research consists of 12 investment professionals with an average of 12 years of relevant market experience. The team is led by Charmaine Cheung. Charmaine has 9 years’ experience in the wealth management industry, spanning financial planning and investment research and has been with BTFG for 6 years. Qualifications within the team include undergraduate degrees in Economics, Business and Commerce, diplomas in Financial Planning, and postgraduate degrees (Masters) in Applied Finance and Business Administration.

Independent Investment Research (IIR) conducts an annual review of the research and model management capabilities of BT Advice Research. The latest reports (released in December 2014) assessed BT Advice Research’s research as ‘Recommended’ or higher across its portfolio construction capabilities through its five risk profile based portfolios.

Further detail may be obtained by emailing

Purpose of research and reports

The purpose of the internal research issued by BT Advice Research is to support the construction of Approved Product Lists (APL) for the BT Advice aligned financial planning channels listed above. The research and information also facilitates financial planners to meet the reasonable investigation requirement under the best interests safe harbour steps when they provide personal advice to retail clients. The classes of products researched and the breadth of research within each class reflects commercial and discretionary decisions with BTFG to support the business objectives of the BT Advice aligned financial planning channels and the needs of the customer segments each channel targets.

BT Advice Research also issues reports for products included on BT Advice aligned financial planning channels APL’s. These reports are available for use by BT Advice aligned financial planners. Where deemed appropriate by the relevant financial planner, reports may also be provided to a client of that financial planner.

Reports published by BT Advice Research are not intended to be, and do not constitute, personal financial product advice, personal investment advice or personal recommendations of any kind (including a recommendation to buy, sell or hold a financial product). Published reports have been prepared without taking account of any person’s objectives, financial situation or needs, and so the reader should consider its appropriateness having regard to these factors before acting on it. Material contained in these publications is an overview or summary only and it should not be considered a comprehensive statement on any matter nor relied upon as such.

Terms used in BT Advice Research reports mirror a product’s APL status and do not constitute personal recommendations. They include but are not limited to ‘Approved with Research’, ‘Approved’, ‘Neutral’, ‘Not Approved’, ‘Sell’, ‘Under Review’, ‘At Limit’, ‘Closed to New Investors’ or ‘Terminate’.

Research coverage

BT Advice Research conducts detailed research on a limited number of investment products to identify a quality list of products suitable for BT Advice aligned financial planners to consider when providing personal advice to their client group. The approved products are included on the financial planning channel’s APL.

In keeping with the specific purpose of BT Advice Research, it is not the intention of BT Advice Research to review all investment product classes or all product issuers in each class. BT Advice Research determines at its own discretion which products it will research. It seeks to identify where gaps exist in the existing researched product suite of BT Advice and to search for products that meet the needs of the client group and the business strategy of the aligned financial planning groups. The exclusion of a particular product does not necessarily imply that the excluded product is a less desirable product, but may reflect that there is adequate representation by existing products in that class, as determined by BT Advice. As such, the coverage of BT Advice Research may change from time to time based on its’ determination of the needs of the financial planning channel’s APLs.

Products researched by BT Advice Research are grouped in the following classes. We have also indicated in brackets the approximate number of products in each class that are currently researched by BT Advice Research:

  • Managed Funds ( 258 )
  • Cash & Term Deposits ( 18 )
  • Annuities ( 9 )
  • Structured Investments ( 47 )
  • Investment Bonds ( 6 )
  • Personal Insurance (18 )
  • Margin Lending ( 4 )
  • Platforms and Retail Products ( 40 )
  • Managed Accounts ( 6 )

In relation to Managed Funds, BT Advice Research publishes two different reports. A Qualitative Report, which outlines the manager profile, BT Advice Research’s view, people, investment process, portfolio construction and approach to risk management and a Summary Report which provides information of BT Advice Research’s view, performance and fund positioning.

In relation to all other product classes, BT Advice Research publishes a Qualitative Report, which outlines the manager profile, BT Advice Research’s view, organisational strength, product features, costs to investors, support available to the planner and the dealer group and the product’s market strength.

Currency and historical research

Research and information produced by BT Advice Research is reviewed regularly. Classes of product are reviewed in sector reports on an annual basis. Individual products are also reviewed at least annually. In addition, managed fund research and information is also updated monthly to reflect current performance and asset dispositions.

Research and information is current at the date of the report, unless otherwise stated in the report.

Copies of historic reports are available from your financial planner or for clients of BT Advice aligned financial planners by

Research methodology

General approach:

The nature of the team’s research process is principally based on fundamental factors which are assessed in a qualitative manner. For example the structure of an investment team is a fundamental factor involving team size, length of service and team turnover. Our assessment of the team will be qualitatively based rather than mathematically derived. Quantitative analysis is also considered part of the process, and is used as a supplementary input to understand the performance and risk of the manager/product issuer.

Due diligence:

The due diligence framework for the research process includes sector reviews and a benchmarking exercise that is conducted by BT Advice Research. In the benchmarking exercise, BT Advice Research conducts its own assessment of a fund or product relative to its peers (or comparable product) in the market.

The research methodology follows the 5 steps illustrated and described below:

Step 1: Filter investment universe
Step 2: Initial Manager and strategy review
Step 3: Product Provider meeting
Step 4: Final review & recommendation
Step 5: Ongoing review

The filtering process in Step 1 is used to remove products with attributes considered unsuitable for client groups of the aligned financial planning entities. For example, for managed funds the filters may include fund size, performance history, the strength of the management team and various quantitative measures.

The filtered products are then reviewed in more detail in Step 2 prior to an in depth review with the product provider in Step 3. The issues considered in step 3 vary according to the type of product.

For Managed Funds reviews, the following factors are considered in Step 3:


  • Philosophy: What is it? Does it make sense? Is it clear and well defined? Is it achieveable relative to the Manager's skill/business model etc.
  • Process: How does the Manager invest? Is it consistent and repeatable? How does it link back to the Manager's philosophy?

Portfolio Construction

  • What is the Manager's approach to Portfolio construction, trading and management of the Portfolio? what are the buy/sell disciplines?


  • What has the Manager deliviered on an absolute, relative and risk adjusted basis? What is the consistency of performance through time? How is the performance being delivered from a stock, sector and timing perspective?

Risk Management

  • How does the Manager define, identify and manage investment and portfolio related risks? What measures/tools do they use in managing risk and over what timeframes?

For other classes of product, the factors considered include ownership and organisational issues, cost to investors, product features, quality of service, market strength, and support to financial planners from sales and support staff.

In Step 4final review and recommendations are submitted for consideration to the investment committee of the relevant BT Advice business. The Business Head or delegate of each advice business is responsible for the final approval of products, but will have regard to the recommendation from the Head of Advice Research, as well as advice from Head of BTFG Risk or their delegates.

The primary objective of ongoing review in step 5 is to ensure the APL continues to be made up of quality investment offerings within the respective product classes and continues to meet the needs of the client groups of the BT Advice business subject to its business objectives.

Additional information is available from your financial adviser or for clients of BT Advice aligned financial planners by emailing

Spread of APL status

The majority of products researched by BT Advice Research will have a status of ’Approved with Research‘. There are no graduations to the status of ’Approved with Research‘ (e.g. there is no “highly approved” nor “average approved” status). Other status generally operate in transitional periods when planners adjust their client’s portfolios in response to a change in status. For example a change in status to “Not Approved” requires the planner to contact the client within a transitional period and recommend that the product be exited, where this is appropriate for their client. Once the transitional period is complete, it is usual for the research coverage to cease by removing the product from the APL.

The ratings used by BT Advice Research have the following meanings:



Approved with Research BT Advice Research has a high conviction in the Issuer’s ability to consistently meet the stated aim and objective of the product.
Under Review Means that an exceptional event has occurred within the product and a further research review will be conducted to ascertain the impact of the event.
Not Approved BT Advice Research believes the Issuer may not be able to consistently meet the stated investment objectives of the product.
Sell BT Advice Research has no confidence in the Issuer’s ability to consistently meet the stated aim and objective of the product.
At Limit BT Advice Research continues to have conviction in the Issuer’s ability to consistently meet the stated aim and objective of the product. However it is considered appropriate to limit exposure to the strategy for commercial reasons.
Closed to New Investors BT Advice Research continues to have conviction in the Issuer’s ability to consistently meet the stated aim and objective of the product. However, either the product issuer or for commercial reasons, the product is closed to new investors.
Terminate The product issuer has decided to terminate the product

As an example of the spread of research status, as at 1 October 2014, 85% of the managed fund status were ’Approved with Research‘, 5% were ’Terminate‘ and 5% ’Not Approved‘. The balance of status (5%) were ’Sell‘, ‘At Limit‘ or ’Under Review’.

Testing our research

BT Advice Research monitors the performance of managed funds against appropriate sector benchmarks on a monthly basis. For example the performance of managed funds investing in large capitalisation ASX securities would be compared to the S&P/ASX200 Accumulation Index.

The performance of funds may be assessed in quartile groupings. Funds in quartile 1 were in the top 25% of performers thereby outperforming 75% of all funds in the relevant sector. Similarly, funds in quartile 1 and 2 outperformed 50% of all funds in the relevant sector. In contrast, funds in quartiles 3 and 4 underperformed 50% of all funds in the relevant sector.

The table below lists outlines ’Approved with Research‘ funds in their relevant quartile over various time periods and shows the number of ’Approved with Research‘ funds and the percentage of all ’Approved with Research‘ funds in each quartile. This analysis shows that over on average over all periods, 69% of ’Approved with Research‘ funds (those in quartiles 1 and 2) outperformed 50% of all funds in the relevant sector. In contrast, the 31%% of funds in quartiles 3 and 4 underperformed 50% of all funds in the relevant sector.

BT Advice Research, Morningstar
Source: BT Advice Research, Morningstar: data as at 31 July 2015

This table is provided for illustrative purposes only. Fund performance and quartile rankings of BT Advice approved funds will change over time. It should be noted that past performance is not necessarily a reliable indicator of future performance.

It should also be noted that not all funds on the APL have been held for the indicated period and other funds have been removed from the APL for performance and other reasons. As such, this table does not cover all managed funds on our APL.

Managing conflicts of interest

All funds or products researched are assessed solely on their investment or product merit in a consistent manner. From the perspective of BT Advice Research, related party investment management teams are considered equally to those who are external to BTFG. In-house investment management teams or product manufacturers have no line of sight to the BT Advice Research due diligence and research process, nor are they involved in any aspect of the APL decision making process.

BT Advice Research is required to prioritise client interests when performing their role and the team is not incentivised to recommend any particular product or platform over another.

BT Advice Research do not charge or receive any remuneration from either internal or external issuers of financial products for undertaking research on the issuer’s financial products.

All members of BT Advice Research are required to comply with the Westpac Group’s Conflict of Interest Policy and to note and declare any material or perceived conflicts of interest when presenting investment recommendations to the APL approval committees.

Peer Reviews: All research recommendations are reviewed by 2 peers to ensure the investment process has been correctly adhered to and that the recommendations are clear, balanced and have a reasonable basis. The author and secondary analyst of the research is required to disclose any conflicts of interest on the report. BT Advice Research has an established compliance process to support the publication of research and the monitoring of conflicts of interest.

Staff: Our research staff are generally paid a salary, superannuation and may also receive additional benefits should they satisfy certain targets. They may also be entitled to receive bonuses (which may include an allocation of Westpac ordinary shares) that are based on factors such as the quality of their research, as well as the efficiency and timeliness of delivery of their services. Our research staff may also be entitled to a bonus determined by reference to the performance of other business units within the Westpac group.

Related party products:  BT Advice Research may, from time to time, produce reports on products issued by a Westpac group entity. For example, entities within the Westpac group issue products which may be covered by a report.  The same controls, criteria and approval processes are applied to each of our reports to ensure the process of preparing and the outcome of the report is consistent and objective. In addition, BT Advice Research may engage external service providers to provide reports and information  on securities of a company in, or product issued by, a Westpac group entity.

Westpac, other entities in the Westpac group, and their representatives may have an interest in the securities of, or an association or relationship with, the entity that is the subject of a report. This could, for example, include a financial interest in, position as an officeholder of, or a contract for the provision of services to, the entity that is the subject of a report. If a person subscribes to the financial products referred to in a research report through a financial product or service issued by a Westpac group company, such subscription may result in companies related to Westpac and representatives of Westpac group companies receiving a commission, fee or other benefit or advantage.

The Westpac group includes a number of companies that provide financial products and services, funds management, insurance, superannuation, investment and administrative services. The Westpac group includes St.George Bank – a division of Westpac, Securitor Financial Group Limited, Magnitude Group Pty Limited, Asgard Capital Management Limited, BT Funds Management Limited, Advance Asset Management Limited and also includes companies that bear the ‘Westpac’, ‘St.George’, ‘Bank of Melbourne’, ‘Bank SA’, ‘Asgard’, and ‘BT’ names. BT Financial Group is the wealth management arm of Westpac.

Trading: Staff are subject to trading restrictions during periods where they are preparing research and information and all staff trading captured by the BT Personal Account Dealing policy is required to be cleared by the Group Control Room prior to placing a trade.  Staff may also be subject to additional restrictions as and when determined necessary by the Group Control Room.

Non-financial benefits: Benefits exceeding $300 are not permitted under the Westpac Alternative Remuneration Policy. Employees may from time to time receive non-financial benefits valued at less than $300 from external or internal Westpac Group product issuers.  BT Advice Research maintain a register of any benefits received by employees that are between $100 and $300 in value. Please let your financial planner know if you would like to see this register.

Further information regarding how we manage conflicts of interest are available from your financial adviser or for clients of aligned financial planners by emailing

Disclosure of interests in products researched by BTFG Advice Research: If the responsible analyst or reviewer holds a material interest in the product that is the subject of a research report or has an association or relationship with the product, this will be disclosed in the relevant research report.

Last updated August 2015.

Disclaimer: This information is issued by Westpac Banking Corporation ABN 33 007 457 141, AFSL 233714 (Westpac). It has been prepared for use by advisers and clients of Westpac Financial Planning, Westpac Private Bank, St.George Financial Planning, St.George Private Clients, Bank of Melbourne, Bank of Melbourne Private, Magnitude Group Pty Ltd and Securitor Financial Group Ltd and other users authorised by Westpac from time to time (“authorised users”) only. It must not be copied, used, reproduced or otherwise distributed or circulated to any person outside Australia or to any third party other than an authorised user.

This information is an overview or summary only and it should not be considered a comprehensive statement on any matter nor relied upon as such. Information that has been provided by third parties has not been independently verified and neither Westpac nor any company in the Westpac Group is in any way responsible for the accuracy or completeness of, or endorses, that information. To the maximum extent permitted by law: (a) no guarantee, representation or warranty is given that such information is complete, accurate, up to date, error or fault free or fit for any purpose; and (b) no member of the Westpac Group is in any way liable to any person (including for negligence) or otherwise for any loss or damage arising as a result of any reliance upon such information.